Energy companies are some of the most lucrative investments in today's market. Accordingly, I've identified seven energy stocks positioned to offer extraordinary returns without subjecting your portfolio to unnecessary risk.
An energy primer
Energy serves as the foundation of a developed economy. In pursuit of this status, countries like Brazil, India, and China have increased their energy consumption by 83%, 95%, and 243%, respectively, over the last 40 years alone. And as you can see in the chart below, we can blame this increase for much of the pain we've suffered at the pump.
Source: indexmundi.com.
If you can't beat them, join them
Although higher energy prices are anathema to the typical consumer, they're a godsend to companies like ExxonMobil
Of course, Exxon isn't the only company profiting from higher prices. Both Chevron
Investors can profit by identifying energy companies that will continue to benefit from these trends, without subjecting their portfolios to unnecessary risk. In the current market, I believe you can do so by investing in big, stable companies that trade at reasonable prices. The seven energy companies I highlight in the table below have market caps exceeding $15 billion, and earnings and dividend yields that beat the broader market.
Company |
Earnings Yield |
Dividend Yield |
---|---|---|
BP |
16% |
3.2% |
Total |
15.6% |
4.5% |
Marathon Oil |
12.7% |
3.5% |
Eni S.p.A. |
12.1% |
5.2% |
ConocoPhillips |
11.8% |
3.8% |
Chevron |
11.5% |
3% |
ExxonMobil |
10.3% |
2.5% |
S&P 500 |
7.4% |
2.3% |
Source: Morningstar.com.
The years to come
I believe energy companies will make shareholders loads of money in both dividend payouts and share-price appreciation. But identifying the right business in which to invest is nevertheless fraught with risk and uncertainty. To follow the companies identified in this article, click here to add them all to your watchlist.